Plains All American is due to complete a transaction that would make it one of the largest publicly traded companies in the world and a serious contender in the ever-evolving energy sector in the United States. Texas is home to some of the United States’ largest energy companies, and this deal has the potential to set Plains apart from he competition. Plains has plans to acquire a majority stake in the EPIC Crude Oil Pipeline. As with all oil-related business deals, the transaction is worth billions of dollars and could reshape the industry in the region.
Plains to purchase a majority stake in a key crude oil pipeline
Plains All American Pipeline, L.P. and Plains GP Holdings (collectively, “Plains”) have announced that it has entered into a definitive agreement to purchase the majority shares of subsidiaries of Diamondback Energy, Inc. and Kinetik Holdings Inc., which operate the EPIC Crude Oil Pipeline. And the deal is astronomical, to say the least.
The Crude Oil market has remained a sustainable source of revenue for the energy sector. As the world explores a variety of renewable energy sources that have the potential to redefine the energy sector, the world’s energy needs remain, and for the time being, Crude Oil is our best and at times only option. That does not necessarily mean the energy sector is solely focused on oil production, but it serves as an integral part of the world’s energy solutions.
Among the benefits of the deal, Plains has now become a major stakeholder in the energy market and delivers several key factors in the energy production pipeline, so to speak. Among the assets that Plains is acquiring are:
- Roughly 800 miles of long-haul pipelines, which include the EPIC Pipeline.
- 600,000 barrels per day oil production, along with low-cost expansion capabilities.
- An estimated 7 million barrels of operational storage.
- Well above 200,000 barrels per day of export capacity.
Plains’ acquisition of the EPIC pipeline is going to cost an insane amount
The deal is reported to be worth over $1.57 billion, inclusive of approximately $600 million of debt that Plains is taking on as part of the deal. They have also agreed to a possible $193 million earnout payment should an expansion to the pipeline capacity be formally sanctioned before year-end 2027. The Epic Pipeline provides long-haul crude oil transport from the Permian and Eagle Ford basins to the Gulf Coast market at Corpus Christi.
Plains’ CEO has praised the acquisition and has pointed out that the deal has massive potential to support additional return of capital opportunities. The agreement is subject to formal approval and could take some time to iron out the details, but we expect that to happen sooner rather than later.
“We are excited to work with the EPIC Management team. This transaction strengthens our position as the premier crude oil midstream provider, complements our asset footprint, and enhances our customer offering. The combination of our stake in EPIC Crude Holdings, coupled with our existing integrated Permian and Eagle Ford assets, enhances our commitment to offering a high level of connectivity and flexibility for our customers. By further linking our Permian and Eagle Ford gathering systems to Corpus Christi, we are enhancing market access and ensuring our customers have reliable, cost-effective routes to multiple demand centers,” – Willie Chiang, Chairman, CEO, and President of Plains
The governing bodies still need to approve the billion-dollar deal
In these types of deals, nothing can proceed without the expressed permission of the regions’ governing bodies, and this deal is no different. The United States government will need to go over the details of the deal and approve the sale before any money changes hands. Having said that, the deal is expected to be completed by early 2026, subject to clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. We expect the deal to go off without any major interruptions and start operating as soon as possible.
